THE Philippine car industry has had its share of surprises in the past decade or two and one of them is the stellar rise of the Hyundai brand. From almost being derided by its competitors and even vehicle buyers, the Hyundai brand succeeded in establishing itself as one of the “Big Guys” in the domestic car industry at the expense of other car brands that looked as if they had strongly established a firm footing in the domestic car market. But for Maria Fe Perez-Agudo, things never came easy for Hyundai in the Philippines, especially from the time she established along with partners Hyundai Auto Resources Inc. (HARI) in 2001 to market the Korean car brand in the country.
“To begin with, nobody wanted to touch the Hyundai brand. Nobody wanted to join Hyundai as a car company, as a business enterprise, and nobody wanted to be called a Hyundai owner,” said Agudo, the president and chief executive officer of HARI.
“So when we started Hyundai in the Philippines, we knew that we were dwarfed by the Japanese and American brands at the time [in 2001],” she added.
But even before the Hyundai brand formally entered the market, the streets of Metro Manila had been littered with units of the Hyundai Starex that had a different styling compared to the vans offered by the Japanese brands.
“In 2001, there were already Hyunda Starexes in the [Philippine] market. The Starex even if you sell it under a banana plant would just sell,” Agudo said.
“Why was the Starex popular despite the absence of a [Hyundai] distributorship? Because it [Starex] was a challenge to the current models available then which were the box-type vans and here comes a bullet-nose type van with a different flavor, a good design and a very competitive pricing,” she added.
Agudo said the popularity of the Starex on Philippine roads puzzled Hyundai Motor Co. Ltd. (HMC) in South Korea, prompting the company to do research on the country’s automotive market.
“They [HMC] also did their market research, and what they concluded was if they stand at the corner of Ayala Avenue and Paseo de Roxas in Makati City, every minute there will be a Starex that will pass by. So that was an encouragement for them,” she added.
The founders of HARI also did a “reverse analysis,” which focused on what vehicles the market wanted instead of identifying the buyers for a certain car model.
“Then we did a reverse analysis, not looking at our products as Hyundai but looking at our market, and what our market wants, what the market wishes for, and what the market demand is,” Agudo said.
What the reverse analysis uncovered was that the most important segment in the Philippine car market was the segment that valued the family.
“That’s when we came to realize that the best way for Hyundai to start [in the Philippines]was by creating and sustaining demand in the most important segment in the Philippines – the family market segment,” Agudo said.
So HARI was incorporated in August 2001 but Agudo three months before that had to develop the five-year business plan that was to be presented HMC to get the distributorship deal for the Philippines.
“I had to convince them that we, the team, could do a good job for Hyundai in the Philippines,” she said.
“So we started our distributorship operations by bringing in one product that would become Hyundai’s symbol of the family and cement our status as the most loved and favorite family van until today – the Starex,” Agudo added.
But just as HARI started operations in the Philippines in August 2001, the attack on the World Trade Center twin towers in New York City on September 11, 2001 shocked the world.
“So the issue was, what is the stage of business at this time? Shall we say, let’s stop first for a year? Or review the current macroeconomic condition of the world? That was the challenge at that time,” Agudo said.
It was at that point that she learned how resilient the South Koreans were because they still saw things as “business as usual” despite 9/11.
“For them it was business as usual. After 9/11 they [HMC representatives] came here in October asking for my [sales]targets, asking me to build dealerships. And even of you tell them, ‘hey we’re just 20 days after 9/11,’ they said ‘9/11 is 9/11, what do we do now?’” Agudo said.
OTHER PROBLEMS TO TACKLE
The other major problem HARI had to contend with along with the impact of 9/11 was the existence of importers of Hyundai products that were not connected with the company. Apparently, independent vehicle importers accounted for 90 percent of Hyundai vehicle sales in the Philippines. That problem made it hard for HARI to attract businessmen to invest in Hyundai dealerships.
“So how do you develop the dealerships when they know that there are existing parallel importers? And the challenge is how do you make them believe we will be in command of the market soon?” Agudo said.
But HARI was able to corner 90 percent of Hyundai vehicle sales in two years, leaving the importers with the balance of 10 percent.
“So to reverse it [situation where importers had 90 percent of sales]in two years’ time is for me an achievement and a milestone,” Agudo said.
She added that those who eventually invested to establish Hyundai dealerships were those who were “entrepreneurial” and “very experimental.”
“In other words, nobody wanted to capitalize or invest in the Hyundai brand, in the business at the time,” Agudo said.
In reality, after HARI was established and the Starex was already enjoying immense popularity, the family van was, ironically, more popular than the Hyundai brand itself.
“The brand was not known yet as Hyundai, it was known as Starex. They didn’t care about the name Hyundai. But they cared about the product, which is the Starex,” Agudo said.
The same thing happened to the Getz and the Tucson.
“Then they wanted to buy Tucson. But do they really care if it’s a Hyundai Tucson or a Ford Tucson. They just wanted the Tucson,” Agudo said.
The more established car brands in the Philippines were also skeptical about Hyundai even surviving in the domestic market, and that it was just a matter of time the brand would disappear or go into oblivion.
“There were reports from 2002 to 2005 the top five [car firms]were giving us, I would say, a deadline that Hyundai would just be good for the next two to three years,” Agudo said.
MAKING INROADS GRADUALLY
HARI and the Hyundai brand, however, proved the skeptics wrong. One of the keys to the Hyundai brand’s gradually gaining a firm foothold on the Philippine car market was the establishment of four dealerships in 2004 and the launching of more models.
“The year 2004 I would say was the first turning point for us. Because by then we had four dealerships, we had our own headquarters, we put up our own office. And then we were negotiating already for other models to come in like the Matrix,” Agudo said.
And in 2005, Hyundai started to establish itself as a brand that allowed it to generate its own followers or “believers.”
“Then we developed the believers, the Hyundai believers. So this was the cycle that we went through. The evolution of Hyundai marker we had in the Philippines,” Agudo said.
“Until finally anything about the Hyundai whether it be an Accent, a Tucson, Santa Fe, was identified as a Hyundai,” she added.
Part of the success of the Hyundai brand in the Philippines can also be attributed to how the management of HMC in South Korea changed its mindset to focusing on quality instead of quantity. The brand worldwide also focused more on developing technologies and improving its styling.
Among the technological breakthroughs of Hyundai was the development of its own CRDi or common-rail direct fuel injection that became a feature in the Grand Starex van and variants of the Accent subcompact sedan and the Tucson SUV.
Also, the impact of Hyundai’s “Fluidic Sculpture” design from 2010 cannot be overlooked in making the brand more recognizable not only in the Philippines but also internationally.
A look at the latest stable of HARI in the Philippines will clearly show most of its models sport the “Fluidic Scuplture” that was first made popular, among others, by the current model Elantra. The all-new Hyundai Tucson, like the generation it will replace, also has the “Fluidic Sculpture” styling along with the Santa Fe, Sonata, Accent, Genesis Coupe, Grand i10, among others. Even the smallest vehicle in the Hyundia line-up, the Eon, also sports that design philosophy.
Agudo said Hyundai was able to develop and adopt the “Fluidic Sculpture” design because it had its own steel plant.
“So if you have steel manufacturing you could bend any steel. You can develop the tensile strength, the skeleton of the cars, and they [Hyundai] had the advantage,” she added.
Today, Hyundai is one of the “Big Guys” in the Philippine auto industry and is set to expand its reach.
The year 2014 saw HARI sell 23,019 units that was a 4-percent increase over the 22,033 units sold in 2013. The company believes it could have sold more units if it fulfilled the pending orders for its newly-unveiled models last year like the Santa Fe.
Agudo, however, realized that HMC deciding to focus on improving its quality turned out to be a blessing because Hyundai has so far not made a recall on any of its products.
She also remains upbeat on the Philippine car market, saying HARI is set to expand its dealership network while improving its after-sales service.
“Our thrust for the short and medium term is to focus on the new growth frontiers in the provincial areas and, at the same time, rationalize and further strengthen our network in the National Capital Region [Metro Manila],” Agudo said.
HARI is set to open in 2015 five new provincial dealerships that will bear the brand’s new Global Dealer Space Identity (GDSI). Also, three dealership relocation projects will showcase facility expansions that adopt the GDSI standard.
“For 2016, we are looking at least four new GDSI dealerships. To recap, at total of at least 13 new constructions [of dealerships]are down the pipeline for the next two years,” Agudo said.
HARI can also boast of winning the following awards from HMC: 2013 Asia Pacific Distributor of the Year; 2014 Best in Customer Satisfaction; and 2014 Regional Excellence Award (Asia-Pacific).
“This [winning of awards]does not happen every five years [and]we have been consistent in our awards,” Agudo said.
“When your technicians are given the skills awards competing with China, US and these big countries, wow! And we show we belong to the top 10 and they know that the Philippines has a spot for Hyundai,” she added.
CORPORATE SOCIAL RESPONSIBILITY
Agudo’s leading Hyundai to become a popular brand in the Philippines was recognized in 2011 when she was named Woman Entrepreneur of the Year by Ernst & Young.
But Agudo is not just an entrepreneur – she is quietly known for her corporate social responsibility (CSR) projects. The vehicle for the company’s CSR projects is the HARI Foundation Inc. (HFPI) of which she is the president. Founded in 2006, among the foundation’s main concerns is to address effects of climate change by educating, mobilizing and empowering Filipinos to adapt and to mitigate the effects of extreme weather changes.
One of the major projects of HFPI is the Hyundai New Thinkers Circuit (HNTC) where outstanding high school students are inspired and trained to become future climate science experts through a scholarship program. The scholarship program covers courses like Geology, Marine Science, Biochemistry, among others.
HFPI’s scholars numbering 100 at the Polytechnic University of the Philippines are “poorest of the poor.”
Another CSR project HFPI is pushing is the Center for Climate Change in collaboration with the Philippine Green Business Initiative. Also, the foundation has donated the Hyundai Green Center for Green Innovation in Bulacan, which is a project with Gawad Kalinga.
“And I think that now becomes the center of why HARI exists and why HARI has to make good business. I mean that’s the advocacy. If there is something that I would like to be known for or connected, it is with the HARI foundation,” Agudo said.
Then there’s the Maria Fe Perez-Agudo Center for Excellence at Saint Scholastica’s College in Manila, her alma mater. A personal project of Agudo, the center holds monthly conventions every month that discusses different topics on empowerment.
Also, students at Saint Scholastica’s who have the potential to graduate at the top are given scholarships and new ones are selected every year to replace those who eventually graduate. Agudo said she herself was a scholar at Saint Scholastica’s and if it were not for that, she would not attain her current standing in the Philippine car industry.
And from the time Agudo formed HARI with her partners, it looked like she loved the challenge of making Hyundai one of the top brands in the Philippines.
“Was it really faith in the brand? Was it really faith in the product? I think it was more of the challenge that was in front of me, the challenge that you can bring a good product to the market, you could develop this brand in the Philippines,” she said.
And she proved the skeptics wrong.